Background & Launch

The Silicon Cape Initiative is a private sector community movement originally founded by two South African high-tech entrepreneurs, Vinny Lingham and Justin Stanford.

Both being entrepreneurs and angel investors in the ICT startup sector in South Africa, they observed the unique confluence of circumstances emerging in their home country and in particular in the province of the Western Cape, which served to create the first organic elements of an ecosystem in it’s infancy, that could be likened to that in Silicon Valley, California, USA.

Silicon Valley is the world’s premier hub for the meeting of minds between technology entrepreneurs and venture capitalists, which has served to produce most of the world’s computer related innovation in the last 20 years, starting with the original microchips, and leading up to today’s web superstars such as Google and Facebook. This convergence of venture capital with technology startups has served to create many “startup millionaires”, who often go on to become angel investors themselves in the next generation of startups. There are thousands of venture capital firms and startup companies who call Silicon Valley home.

The key factors that made Silicon Valley happen are quite diverse, but range from being a place that the right kinds of people like to live (sometimes distilled as “rich people and geeks”) to being the right economic and regulatory environment, which is both condusive to the creation and growth of a vibrant venture capital investment ecosystem, as well as attractive to young entrepreneurs from around the world, and bringing the two together.

Vinny and Justin observed that South Africa, and in particular the Cape, is in a similar position to where Silicon Valley was some 15 years ago. The right elements have fallen to hand, but with some additional South African flavours, which could make it even more attractive to global investors than Silicon Valley, such as lower costs but an equally high quality output.

The ecosystem that could emerge is in its infancy. With a handful of promising local startups starting to venture into the global scene, but still operating very much in isolated pockets, and a small local venture investment community currently forging ahead and attempting to grow, a number of obstacles and issues have arisen which could stunt or even stifle it’s emergence, many of them legal or regulatory.

Noting that the ecosystem was attempting, organically, to get started, but needed some prompting and an awareness boost, Vinny and Justin decided to raise wider awareness of it and promote the concept, which led to the creation of the Silicon Cape Initiative, launched on www.siliconcape.com. This created a brand and a social network that the local community could rally around and find each other under, and which could also be promoted to those outside of the relatively small community on a local and global stage.

When word got out of the launch of the initiative, initially intended to be small, enthusiasm spread like wildfire through the local community. Interest proved to be far wider and more intense than initially expected. It culminated in an open and free launch event for the concept, which took place on October 8th 2009, where over 500 people from across a broad spectrum attended.

Representatives from schools, universities, startups, big business, local and national government, NGOs, the venture capital industry, and many more attended with great enthusiasm. Over a third of the audience was expected to be young IT entrepreneurs.

Speakers from different backgrounds presented on the opportunities and the challenges facing the creation of the Silicon Cape. The overwhelming message was that South Africa has the opportunity at this point in time to create an environment and ecosystem, building on a set of organic circumstances, that will serve to create and foster an intellectual property (IP) development hub and jurisdiction, that attracts the best minds and venture investment, so that it can ultimately become a net exporter of IP and earner of IP revenues, or else it will become more and more a net exporter of talent. IP entrepreneurs will simply move to wherever they are most welcome and the best environment and circumstances are available to them, and there they will create and register their ideas.

The initiative is now being handed over to the community by the founders, to carry the vision forward. A community nominated and voted in steering committee will be taking over. Its intention is to raise awareness of the opportunity and activities taking place locally and internationally, and to engage with government on an array of regulatory hurdles and the possible creation of an incentivised environment to attract investment and boost the creation of the ecosystem. It has become apparent there is an opportunity in South Africa to create a “Silicon Valley of Africa”, and attract the brightest minds, best technical talent, and local and foreign investors to establish a rich ecosystem of innovation and venture investment with global potential. The next great economy of the world is the information economy, and South Africa needs to start planning to make it’s transition from a resource economy (the finite reserves of which will end one day) to this new economy, and be able to compete globally.

Israel already achieved this to great effect since the early 90s, by creating a set of tax incentives for venture capital investment. Billions of dollars of investment funds were raised, and thousands of high-tech startups emerged, many making a successful exit in the US or listing on the NASDAQ. This led to the development of the established US-Israel venture capital model.

Chile has recently instituted a raft of incentives for IP entrepreneurs and investors as well, and other nations are in the process. Jersey, already a no tax zone, has recently instituted strong IP laws, designed to make it an attractive global IP hub.

This initiative was thoroughly endorsed by Dr. Mamphela Ramphele head of the new Technology Innovation Agency (TIA) and a speaker at the launch event of the Silicon Cape Initiative, who committed herself to backing the concept during her speech